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In order to fund the Union's war effort, Congress passed and the President signed the Revenue Act of 1861. The bill taxed imports, provided for a direct land tax and imposed a tax of 3% on individual incomes over $800. It did not provide for an enforcement mechanism. Consequently, the law generated little additional revenue.
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The Revenue Act of 1862 was passed to help fund the American Civil War. The Act was signed into law by President Abraham Lincoln, introducing the first progressive rate income tax to the country. Annual income of U.S. residents, to the extent it exceeded $600, was taxed at a 3% rate; those earning over $10,000 per year were taxed at a 5% rate. The office of the Commissioner of Internal Revenue was also established,
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After passing taxes on alcohol and tobacco in 1868, Congress repeals the income tax in 1872.
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Congress passes the Revenue Act of 1864, which lowered tariffs and levied a two percent tax on individuals with incomes in excess of $4,000. Fewer than 5 percent of Americans earned sufficient income to have to pay the tax. The act also imposed a 2 percent tax on the income of corporations and certain associations, although there were exceptions for charitable organizations, mutual banks, and insurance companies.
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In Pollock v. Farmers' Loan & Trust Company, the Supreme Court ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because they violated the provision that direct taxes be apportioned by state.
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Congress passes the sixteenth amendment, which will allow them to levy taxes on individual's incomes.
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The states ratify the 16th amendment, which allows Congress to levy an income tax without apportioning it among the states or basing it on Census results.
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The U.S. government brings in $1 billion in tax revenue this year.
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President Roosevelt proposes taxing individuals who makes over $100,000 a year at 99.5 percent. Congress refuses to go along.
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Congress passes and the President signs the Current Tax Payment Act of 1943, which allows employes to withhold income taxes from their employees' paychecks.
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The U.S. Congress passes the Tax Reform Act of 1986 to simplify the income tax code, broaden the tax base and eliminate many tax shelters and other preferences. The top rate falls from 50 percent to 28 percent.
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A supercommittee convened by the President will release its suggestions to Congress. They will have a month to vote on them or automatic cuts go into effect.
